M/s.Revathy Kalamandir P.Ltd, Trivandrum V. JCIT, Trivandrum

ITA 136/COCH/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65016 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 15-11-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 22-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUSAN GEORGE VARGHESE
• Assessee Lawyers: N J MATHEWS

Judgement Text

1 ITA NO. 136/COCH/2011 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 136/COCH/2011 (ASSESSMENT YEAR 2007-08) M/S REVATHY KALAAMANDHIR PVT LTD VS THE JT.CIT, R ANGE-1 2 ND ROYAL PALMS THIRUVANANTHAPURAM OPP. COMMISSIONER OFFICE VAZHUTHACAUD THIRUVANANTHAPURAM PAN : AACCR7544M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.J. MATHEWS RESPONDENT BY : SMT. SUSAN GEORGE VARGHESE DATE OF HEARING : 15-11-2012 DATE OF PRONOUNCEMENT : -12-2012 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE TAXPAYER IS DIRECTED AGAINST TH E IMPUGNED ORDER OF THE COMMISSIONER OF INCOME-TAX(A) CONFIRMING THE LE VY OF PENALTY U/S 271D OF THE ACT FOR THE ASSESSMENT YEAR 2007-08. 2. SHRI N.J. MATHEWS, THE LD.COUNSEL FOR THE TAXPAY ER SUBMITTED THAT THE TAXPAYER HAS RECEIVED RS.9,57,000 FROM M/S SEVEN AR TS INTERNATIONAL LTD AS 2 ITA NO. 136/COCH/2011 ADVANCE FOR DISTRIBUTION OF FILMS. REFERRING TO TH E COPY OF THE AGREEMENT SAID TO BE ENTERED INTO BETWEEN THE TAXPAYER AND M/ S SEVEN ARTS INTERNATIONAL LTD, THE LD.COUNSEL SUBMITTED THAT TH ERE WAS AN AGREEMENT FOR DISTRIBUTION OF FILM, MAHASAMUDRAM ACTED BY SHRI MOHANLAL AND EXCLUSIVE DISTRIBUTION RIGHT WAS GRANTED BY THE TAXPAYER, WHO HAPPENED TO BE THE PRODUCER OF THE FILM TO M/S SEVEN ARTS INTERNATIONA L LTD, WHO, IN TURN ADVANCED RS.9,57,000 TO M/S SEVEN ARTS INTERNATIONA L LTD PURSUANT TO THE AGREEMENT DATED 24-05-2006. THEREFORE, ACCORDING T O THE LD.COUNSEL, THE RECEIPT OF RS.9,57,000 IS NEITHER A LOAN NOR A DEPO SIT, HENCE, PROVISIONS OF SECTION 269SS ARE NOT ATTRACTED; ACCORDINGLY LEVY O F PENALTY U/S 271D IS NOT JUSTIFIED. 3. ON THE CONTRARY, THE LD.DR SUBMITTED THAT THE TA XPAYER HAS TAKEN RS.9,57,000 FROM M/S SEVEN ARTS INTERNATIONAL LTD I N CASH. SINCE THE AMOUNT WAS RECEIVED IN CASH, THE ASSESSING OFFICER LEVIED PENALTY U/S 271D OF THE ACT WHICH WAS RIGHTLY CONFIRMED BY THE COMMI SSIONER OF INCOME- TAX(A). THE LD.DR SUBMITTED THAT THE ADVANCE WAS M ADE AT THE TIME OF PRODUCTION OF THE FILM. THEREFORE, IT IS AN INVEST MENT / DEPOSIT FOR THE PURPOSE OF PRODUCTION OF THE FILM AND CANNOT BE CON SIDERED TO BE ADVANCE FOR THE PURPOSE OF GIVING THE DISTRIBUTION RIGHTS. ON A QUERY FROM THE BENCH WHETHER THE AGREEMENT ENTERED INTO BETWEEN M/S SEVE N ARTS INTERNATIONAL LTD AND THE TAXPAYER HAS BEEN EXAMINED, THE LD.DR V ERY FAIRLY SUBMITTED THAT THERE IS NO REFERENCE IN THE IMPUGNED ORDERS A BOUT THE AGREEMENT. 3 ITA NO. 136/COCH/2011 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THERE IS AN AGREEMENT BETWEEN THE TAXPAYER AND M/S SEVEN ARTS INTERNATIONAL LTD I N RESPECT OF THE FILM PRODUCED BY THE TAXPAYER. AS PER THIS AGREEMENT, I N RESPECT OF THE FILM PRODUCED BY THE TAXPAYER, VIZ. MAHASAMUDRAM ACTED BY SHRI MOHANLAL THE DISTRIBUTION RIGHTS OF THE SAID FILM IN THE STATE O F KERALA WAS TO BE GIVEN TO M/S SEVEN ARTS INTERNATIONAL LTD. THE TAXPAYER NOW CLAIMS THAT PURSUANCE TO THIS AGREEMENT, AN AMOUNT OF RS.9,57,000 WAS REC EIVED FROM M/S SEVEN ARTS INTERNATIONAL LTD. THEREFORE, IT IS NEITHER A LOAN NOR A DEPOSIT. HOWEVER, THE LD.DR SUBMITS THAT THE ADVANCE WAS MAD E AT THE TIME OF PRODUCTION OF FILM, THEREFORE, IT CANNOT BE CONSIDE RED TO BE AN ADVANCE FOR GETTING THE DISTRIBUTION RIGHTS. THE FACT REMAINS IS THAT THE AGREEMENT SAID TO BE ENTERED INTO BETWEEN THE TAXPAYER AND M/S SEV EN ARTS INTERNATIONAL LTD WAS NOT EXAMINED BY THE LOWER AUTHORITIES. THE REFORE, THE MATTER CAN BE DECIDED IN RIGHT PERSPECTIVE ONLY IF THE AGREEME NT DATED 24-06-2006 WAS EXAMINED BY THE LOWER AUTHORITIES. SINCE THE AGREE MENT WAS NOT EXAMINED BY THE LOWER AUTHORITIES, THIS TRIBUNAL IS OF THE C ONSIDERED OPINION THAT THE MATTER NEEDS TO BE EXAMINED BY THE LOWER AUTHORITIE S. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE ARE S ET ASIDE AND THE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-CONSIDER THE ISSUE AFRESH AFTER CONSIDERING THE AGREEMENT SAID TO BE EXECUTED BETWEEN THE TAXPAYER AND M/S SEVEN ARTS IN TERNATIONAL LTD AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY TO THE TAXPAYER. 4 ITA NO. 136/COCH/2011 5. THE TAXPAYER SAID TO HAVE RECEIVED RS.25,000 FRO M APPU, RS. 1,30,000 FROM GOPAN, RS. 25,000 FROM MENAKA AND RS. 1,71,000 FROM SURESH KUMAR. THE CONTENTION OF THE LD.COUNSEL IS THAT THESE PAYMENTS ARE NOT PAYMENTS IN CASH. ACCORDING TO THE LD.COUNSEL, THESE ARE REIMBURSEMENTS OF THE EXPENDITURE INCURRED BY THE E MPLOYEES. THE LD.COUNSEL FURTHER SUBMITTED THAT WHEN THE MANAGING DIRECTOR WAS AWAY FROM THE HEADQUARTERS IN CONNECTION WITH SCREENING OF THE FILMS, THE EMPLOYEES MET THE URGENT EXPENDITURE SUCH AS PAYMEN T OF TELEPHONE BILLS, ELECTRICITY BILLS, ETC. WHICH WAS REIMBURSED BY WAY OF A JOURNAL ENTRY. THEREFORE, ACCORDING TO THE LD.COUNSEL, THERE IS NO LOAN OR DEPOSIT. 6. ON THE CONTRARY, THE LD.DR SUBMITTED THAT IT IS NOT A REIMBURSEMENT OF THE EXPENDITURE BUT A CLEAR CASE OF GIVING PHYSI CAL DELIVERY OF CASH. THE TAXPAYER HAS RECEIVED THE CASH. THEREFORE, THE COM MISSIONER OF INCOME- TAX(A) HAS RIGHTLY CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. FROM THE ORDER OF THE CIT(A) IT APPEARS THAT THE PAYMENTS WERE MADE TO VARIOUS PERS ONS OUT OF THE FUNDS PROVIDED BY THE ABOVE SAID FOUR PERSONS, VIZ. APPU RS.25,000; GOPAN - RS. 1,30,000; MENAKA - RS. 25,000; AND SURESH KUMAR RS. 1,71,000. THE COMMISSIONER OF INCOME-TAX(A) FOUND THAT THE AMOUNT S RECEIVED FROM THE ABOVE FOUR PERSONS DO NOT RELATE TO ANY JOURNAL ENTR Y AS CLAIMED BY THE TAXPAYER. NO MATERIAL IS AVAILABLE ON RECORD TO CO NTRADICT THIS FINDING OF THE COMMISSIONER OF INCOME-TAX(A). THOUGH THE TAXPAYER CLAIMS THAT WHAT WAS 5 ITA NO. 136/COCH/2011 PAID TO ABOVE FOUR EMPLOYEES IS ONLY REIMBURSEMENT OF THE EXPENDITURE INCURRED BY THEM, NO MATERIAL IS AVAILABLE ON RECOR D TO PROVE THE SAME THAN A MERE ORAL SUBMISSION. IN THE ABSENCE OF ANY OTHE R MATERIAL ON RECORD TO SUPPORT THE CONTENTION OF THE LD.COUNSEL, THIS TRIB UNAL IS OF THE CONSIDERED OPINION THAT THE COMMISSIONER OF INCOME-TAX(A) HAS RIGHTLY CONFIRMED THE PENALTY. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE COMMISSIONER OF INCOME-TAX(A) ON THIS ISSUE. THE S AME IS CONFIRMED. 8. IN THE RESULT, THE APPEAL OF THE TAXPAYER IS PAR TLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DECEMBER, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 14 TH DECEMBER, 2012 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH